tv Nightly Business Report PBS January 3, 2018 5:00pm-5:31pm PST
>> announcer: t "nightly busi triple play. all three major averages close at records, as investors focus on fundamentals and turn a blind eye to some remarkable assertions about the president's inner circle. record prices. demand for cars and trucks remains very healthy, even as shoppers pay more and more for them. new therapy. a medication for a rare disease comes with a hefty price tag, but also some new ideas on how to pay for it. those stories and more tonight on "nightly business r. good evening, everyone, and welcome. it may be cold outside, but wall street is hot. the dow is closing in on 25,000.
it's within 80 points of it, in fact. the s&p 500 today traded above 2,700 for the fire ever. and the nasdaq solidified its position well above 7,000. so why? well, the latest readings on the economy were strong. and there is optimism that corporate profits will rise again this year. now, that's what investors focused on today, brushing off a double dose of drama in washington. first came controversy over presidential tweets about nuclear buttons. next was a bombshell white house statement in which mr. trump excoriated and basically excommunicat his former chief strategist steve bannon. bannon offense? giving incendiary quotes to the author of an upcoming tell-all book about trump's first year in office. but market jitters? uh-uh, no way. the so-called fear gauge on wall street fell to record lows as
stocks hit new highs. the dow jones industriae rose 28 points. the s&p 500 gained 17. the nasdaq added eight. what's next for stocks? bob pisani takes a look. >> reporter: you might think it's time foo tak a pause, and tha unreasonable. but that's not the prevailing opinion. the street is mostly bullish. you can't blame them. all the textbook conditions for higher stocks are still in place. global economic expansion, strong employment, low inflation and low interest rates, with the fed expected to continue on a slow path to higher rates. this talk of infrastructure spending plan now, talk that wages may finally start to move up but not too much, and some strate believe the u.s. could see 3% gdp growth. that hasn't happened since 2005. bears are arguing valuations are too high.
that's true, stocks are expensive. but if the economy keeps expanding, it's not hard to argue it could stay expensive. they worry about some external event like a terrorist attack or a blow-up in north korea. finally, inflation is a worry but many argue even with economic growth, inflation is likely to remain relatively muted. finally, despite the intrigue in washington, the market continues to tune all of that out. for "nightly business r bob pisani at the new york stocexchange wall street may have sidestepped past today's d.c. drama, but in washington it was impossible to ignore, not just because of the gloves-off brawl between the president and his former chief strategist, but because of what that upheaval could mean for the trump white house and its agenda. steve bannon was considered an architect of the trump campaign, and of the white house's nationalist economic prescriptions. but in a new book written by
author michael wolff, bannon calls the 2016 meeting between top campaign aides and a russian lawyer treasonous. he also predicts that financial crimes like money laundering would be the downfall of several members of the president's inner circle. and in a reference to the president's son, bannon said, quote, they're going to crack don junior like an egg on national tv, end quote. the president says bannon, whom he fired, has lost his mind. john harwood is in washington tonight to kind of sift through the donnybrook and what it might mean for the president's plans on immigration and infrastructure and much more. john, there was a lot of political drama in washington today. let's first start with why this book is getting attention. and part of it is because of its author, michael wolffel. >> reporter: donnybrook is a good word for it, sue. michael wolff is a long time journalist. a guy who has got some attitude, he's drawn criticism in the past for embellishing
stories he's told. however he gained enough trust from steve bannon and others in the white house that he got extensive access, spent a lot of time as a fly on the wall in white house meetings. that's going to lend the anecdotes he has and the brutal depiction he makes of president trump, it's going to invest that with a little bit more credibility. such access to a known sort of gossipy journalist? >> reporter: well, it's an interesting question. michael wolff is somebody who had done a lot of reporting and was intimately familiar with rupert murdoch. rupert murdoch is a very important person to donald trump. and so i imagine that that lent him some credibility that helped him gain access. but sarah sanders, the white house press secretary, said today that it was steve bannon who in the end provided most of the entree to the white house to michael wolff. but there's no disputing there was a lot of entree.
>> what does this do to the fact that the white house wants to push through several key initiatives, immigration reform and infrastructure? does the noise surrounding this bo >> reporter: well, i think all of those efforts to make legislative progress on other issues faced an uphill fight to begin with. but the more chaos you have in the white house, the more you have splits within the president's own team, not to mention splits between the president and republican leader it is to move forward. that comment that you mentioned about steve bannon's view that the meeting with the russians at trump tower was treasonous, that signals a real problem with the mueller investigation, which is ongoing, and that could provide a bigger threat to the agenda than anything else. >> john, thank you so much. >> reporter: you bet. >> john harwood in washington tonight. back to the economy now, and there are a number of positive reports on it. manufacturing expanded more than expected last month, capping the strongest year for the sector
since 2004. according to t institute for supply management, there was a surge in new orders, and an increase in export orders. a measure of manufacturing employment, however, fell. and construction spending hit a new high. builders spent more than expected on construction projects in november. the fourth consecutive monthly gain. strength in single family construction offset weakness in apartment buildings. not residential construction rebounded after a slide. the auto companies ended the year on a strong note, driven by demand for pickups and suvs. as phil lebeau reports, in some cases americans are paying more than ever for the models they're buying. >> reporte it may have been a chilly end of december for most of america. but showrooms across the country were hot. how hot? the pace of sales last month was
well above what many were expecting. a robust economy, low unemployment, and strong consumer confidence made it a busy end of the year at dealerships. >> people are feeling pretty good, maybe there's some bonus checks coming your way at the end of year. there is that mindset that starts on black friday and kind of goes to the end of the year that, you know you've got to get in before the start of the new year to get a great deal. >> reporter: what's selling? ford's f series had its best year since 2005. g mchl sold over a million crosr vehicles last year. honda and nissan set new records for u.. the average praise paid for a new vehicle now tops $36,000. but healthy incentives are helping close the deal with many buyers. >> they're looking at some of these deals and think, i feel good about my job, about the overall economy. these deals seem really great, why don't i just buy a car.
that's probably driving a lot of the sales. >> reporter: after seven straight years of rising sales, the auto industry cooled off slightly in 2017. still, sales topped 17 million vehicles for a third straight year. will it be four straight in 2018? probably not. over the last six years, americans have bought almost 100 million new vehicles. so demand is expected to finally slow down. phil lebeau, "nightly busi. today's economic reports underscore the economy's strengthening fundamentals, something th has not gone unnoticed by the federal reserve. at the central bank's most recent meeting, policymakers expressed growing confidence in the economy but they also appeared uncertain over the potential impact of the new tax policy. >> reporter: minutes of the december federal reserve meeting show officials debating strong but contradictory forces affecting the economy, some of
which could lead to higher interest rates this year and some of which could lead to lower rates. the numbers showed little change for the central rates in the economy, they suggested the differences between hawks and doves on the committee may have widened. and both seem to be digging in their heels. the most benef raising interes rates saw the outlook for growth in the labor market as both strong and strengthenind of but it w but it was over inflation that the two sides seemed to part ways. a few went so far as to say they're not comfortable with three rate hikes this year. a hawkish few want even faster tightening because they say y that low tes hadn't tightened rates will lead to instability. they expect higher consumer and capital spending by business. most fed officials boosted their
gdp projections because of tax cuts, saying the cuts could raise potential gdp. some were cautious on the effects, saying companies may use it for mergers and acquisitions or debt reductions or buybacks. on inflation, again, the average fed official thinks inflation will move back towards the fed's 2% target. but the doves are worried that low inflation has reduced expectations for consumers. hawks on the other ha worry about elevated asset values in a soaring stoc volatility in the market, posing a risk to financial stability over time. all this means that the job of incoming fed chairman jerome powell will be tougher when he takes over from janet yellen in early february. he'll have to negotiate the uncertain effects of tax cuts and low inflation and work to find a consensus between the two groups that increasingly look to be on different sides of the debate. for "nightly business ror
still ahead, a new medicine, a steep cost, and some new ideas pfizer will partner with a biotech company to develop a gene therapy to treat als, a disease that affects nerve cell cord. the gene therapy will also treat a related neurodegenerative disorder. the partnership with sangamo therapeutics deepens pfizer's investment in dna-based treatments. > the food and drug last month approved a treatment for a rare form of blindness marking the first approval of a gene therapy for an inherited disease. the cost of this one-time treatment is $850,000.
but along with the high cost comes new potential payment >> reporter: medicin has bee pursuing the promise of gene therapy for decades. the goal, to deliver healthy copies of genes to make up for ones that cause disease. what makes the approach revolutionary is it's aimed to only be administered once to fix the problem. it was only in december that the united states got its first gene therapy approval for a drug from spark therapeutics. it's called luxterna. it treats a rare inherited retinal disease that can lead to blindness, often affecting kids early in their lives. >> let me see that. >> reporter: in clinical trials it helped improve patients' vision in low light. it doesn't necessarily restore perfect sight, but patients have major differences. >> before, i couldn't see snow, the little snowflakes when they were falling. then i went outside when it was snowing and i was like, oh, i can see the snowflakes! >> reporte with new approaches to medicine come new prices.
a key question for gene therapies is how to pay for a treatment that's only administered one time. versus chronic therapies patients take for months, years, or even their entire lives. >> as reflected over the last couple of months, we've done a fair amount of work to establish what we think is the value of luxterna. we think the value of luxterna is in excess of $1 million. we've tried to balance the concerns about accessibility, that patients, families, and health care professio have voiced, the concerns about budget impact we've heard from payers as well as the need for us to build and create a path for a sustainable business model. >> reporter: wall street has been expec a price of at least $1 million for the one-time treatment. the drug's price announced today, $850,000 in total. it's the highest sticker price for a medicine in the u.s. but that doesn't necessarily make it the most expensive to the system. many drugs for rare diseases are priced at many hundreds of thousands of dollars per year and are taken chronically.
spark announced a series of new payment models along with the price tag including tying rebates to how well the drug works immediately and over time, alleviating the need for hospitals to purchase the drugs themselves, and a proposal for medicare and medicaid services to implement payments in installments. e company said more insurance coverage announcements will come in the next weeks and months. spark is not the only company working on ge therapies. luxterna is the first medicine of its kind to come to the u.s. others are in development for muscular dystrophy and other maladies. spark's payment plans may lay a foundation for what's to come. for "nightly business rt, meg terrell. let's turn our attention to those pricing plans meg just referenced. will other companies offer installment plans for rebates? vincent chan is a senior analyst at bernstein.
welcome, good to have you with us. let's start with the idea that a medicine's cost might be adjusted by how well it performs. is that something that's really feasible? >> i think that's actually something we're starting to see a little bit more of over time. i think it's potentially an effective way to facilitate access. payers. i think we'll see more of it as we see more motion towards more innovative pricing plans, especially for these high cost drugs. if we think about the arguments around drug pricing, one of the areas of debate is the idea of how can you better align the price paid to the value that's delivered in te hea care. and rebates or some sort of outcomes based pricing, tying the price to the outcome achieved, we've seen a few examples already in the united states, novartis has a cell therapy for cancer that was recently approved, and the price there is $475,000 per year, but cms will only pay if patients
actually respond. another example would be the high priced cholesterol drugs. some companies have deals in place, full price only if patients see the lowering of cholesterol in trials. >> i was also interested in i guess you would equate it to almost an annuity system for drug payments, where you would pay -- the insurer would pay every year a certain amount as long as the patient kept responding. so it almost amortizes out their cost and it allows them to plan and it allows the patient to know that they're going to get their treatment. >> yes, so the installment plan that spark announced today, that's interesting, because it essentially allows payers to spread out the payment over multiple years. rather than paying $850,000 up front, maybe you pay 425 this year and 425 the next year. that's useful because of two reasons. the first is if you're a smaller plan and you may not be able to foot the bill for an $850,000
drug this year, that allows you to space it out and absorb that blow a little better. the second would be, once we get to gene therapies that treat broades -- >> can i ask you, mr. chan, does it also to a certain extent shield the company over criticism over the high price of the drug if they offer these types of alternatives? >> my sense is it does a little bit. there's some positive publicity that comes for both the payer and the pharmaco in terms of better aligning the value to the price paid. the greater access it affords spark in terms of more plans being willing to open the gates to patients who have this rare disease. >> thank you very much, vincent chan with bernstein. dominion says it will buy scanna for more than $8 billion, taking on costs associated with
scanna's failed nuclear project. last year scanna abandoned plans to finish two half be sure built nuclear reactors in a move that sparked a federal investigation. under the deal, dominion will pay more than $1 billion to customers who were forced to pay for the unfinished plant. dominion energy shares off nearly 4% to $77.19. an online report alleged intel chips found in millions of computers around world carry a flaw that could allow hackers access to personal information. tech website register reported programmers e rushing to fix the vulnerability. but there's a cost. the updates are expected to slow down computers by about as much as 30%. intel has refuted the news, saying it was inaccurate, and was planning to disclose the issue next week. sh int fell 3% on the news to $45.26.
meanwhile amd shares popped as that chip maker is believed not to be impacted by this particular security issue. american express says it expects to report a fourth quarter loss as tax reform takes a more than $2 billion bite out of profits. the credit card companies sees earnings for the year below initial estimates. shares rose fractionally nonetheless. and tesla delivered about 1,500 of its newest model 3 vehicles in this latest quarter, missing wall street's estimate by a mile. wall street figured on 4,000 delivers. the automaker said it achieved record deliveries in total when you inclmodels. shares ended the regular day down 1% to $317.25. a deep freeze as gripped large portions of the u.s. last night we told you how the cold is creating record demand for natural gas. today, there was even snow in tallahassee, florida for the firs in three decades.
and even orlando, where people usually go to escape winter headaches, is feeling that chill. >> reporter: you normally think of orlando, florida as the place for suns, and fun vacations. but not this week. freezing temperatu in orlando have led to many closures, in particular the three major water parks in town. aquatica, volcano bay, and the lagoon. last year the city welcomed 68 million visitors who had a $64 billion economic impact. >> it's big waste to buy sunscreen this week. it's a lot more rain and frost three water parks are owned by seaworld, disney, and universal, who can handle the temporary closures. each company still has kept open their traditional theme parks in orlando despite fewer visitors.
the companies have their locations around the country and the world to offset any losses here. but it's a lot of the smaller businesses, local in town, that don't have the ability to withstand as much of the decline. >> it really shot down after a while, just because it's raining, nobody really wants to come out and get out of their houses. it's really cold, it's really wet. >> rep local residents are not used to this type of cold. some said they plan to stream netflix until the weather got better. scho across the state have closed. there is fear about damage to citrus crops and major airlines are letting fliers cancel or reschedule flights without penalty. >> i'm not really prepared if there is none. if there is, i'll stay put. netflix, you know, and we have fun. >> reporter: 45 degree high temperatures might seem like a nice day in modifi country t that's not what residents in orlando are used to. a local home depot store says they're almost completely sold out of space heaters and
firewo. eric chemi in orlando, florida. coming up, amazon's search for a home. >> reporter: amazon says it wants a second home that's not unlike its first home in seattle. denver has a lot in common with seattle. that's good and bad. is this the place? we'll have the s sometime in this new year, no one's saying quite when, f its $5 billion nnounce the second headquarters. more than 200 cities have submitted bids, and scott cohn is traveling to as many of them as possible before the big announcement.
today, he's in the mile high . >> reporter: amazon says it wants its second headquarters to replicate the original in seattle. and no city is more similar than this one. both have mountains. seattle has the cascades. denver the front range of the rockies. both have skilled workers. washington state, with the largest concentration of s.t.e.m. workers, colorado with the most educated workforce overall. both even have legalized marijuana. colorado governor john hickenlooper, a former denver mayor, thinks this city is a natural. >> denver is one of the top cities in america. plus we've got that can-do western attitude that's exemplified amazon. >> reporter: the state's 75-page bid, submitted in october, touts denver's workforce, clean energy, and mass transit, including the nation's fifth busiest airport. there is no better place for
amazon's second home than colorado, the governor writes. others agree. back in september, before anyone submitted a bid, "the new york times" declared denver the winner, citing the city's lifestyle and affordability, coupled with tech talent from nearby universities. but the article doesn't mention some of the other similarities between seattle and denver. in fact denver has many of the same issues that forced amazon to look outside seattle to begin with. those skilled workers are in short supply. unemployment in denver is just 2.6%, driving wages to among the and just like washington, colorado has an infrastructure problem, with more than two-thirds of roads in mediocre poor condition. add to that a nagging pension shortfall in state and the governor is working to control expectations about the amazon bid. >> there are a lot of great cities in america. there are a lot of -- i mean, it's a healthy competition in that sense. >> reporter: for now, denver is
>> this is "bbc world news america." funding of this presentation is made possible by the freeman foundation, and kovler foundation, pursuing solutions for america's neglected needs. >> planning a vacation escape that is relaxing, inviting, and exciting is a lot easier than you think. you can find it here in aruba. families, couples, and friends can all find their escape on the island with warm, sunny days, cooling trade winds, and the crystal blue caribbean sea.